Can Two Live as Cheaply as One? The Final Update (or, “When Our Only Job Imploded”)

Welp, we finally called it: After six months in a row of spending more than we brought in, Mr. Vega got a part-time at our favorite grocery store. That few hundred dollars a month goes a long way, and his employee discount has also helped to lower our grocery expenses. Most importantly, he loves his job, his co-workers and customers, and even after spending 8 hours on his feet, he comes home happy and energized. What a far cry from his previous career in high-pressure sales, which caused him constant stress and anxiety! 

I think that what we were really trying to do should have been called “Can Two Live as Cheaply as One Under-Earner?” because the significant pay-cut that I took in order to work a “full-time with benefits” job sure didn’t help the situation any! What we’re doing now could be categorized as “Two can Live as Cheaply as One and a Half,” which seems appropriate to our Post-Recession 21st Century economic climate. 

Over the past several months, there were some radical changes in my previous employer’s company culture. I tried my best to adapt, becoming increasingly uncomfortable as the changes mounted. But with Mr. Vega in school full time (and doing very well, I might add!), the pressure of being the sole earner in our household had me feeling somewhat trapped. And I was reluctant to leave the group of truly remarkable people I worked with each day… It’s no exaggeration to say that I’ve made some friendships there that will be lifelong. 

img_1776

First Day of School!

Eventually, though, I came to accept that working where I felt that I was being treated unfairly was taking too great a toll on my health and relationships. On the day I tendered my resignation, so did my direct supervisor and about 1/4 of my colleagues! I’m not wishing the company any ill will, but it was validating to see so many people make the same decision I did. That was a rough week at our little hippie house, made rougher still by the reality that I had just walked away from our only steady income and our health insurance. 

We went to www.healthcare.gov and selected a gold-level plan that would be accepted by most of our preferred providers, and that would give us an amount of coverage we felt comfortable with. It isn’t cheap, but it is something we believe to be more important than many other expenditures that we consider optional.

Throughout my career, whenever I have taken the leap of faith to leave an unhealthy job that I thought I “needed,” luck has been on my side, employment-wise, and this time was no exception: Two of my part-time jobs suddenly had a greater need for my services, and I was all too happy to oblige. One of them also instituted an across-the-board pay raise, the first in eight years. Those two jobs gave me enough work for the Fall that I didn’t have to look anywhere else. Because the work is at colleges, and employment during school breaks can be scarce in my field, we revived our practice of re-distributing that income by putting 1/3 of each school check into a “Summer Fund.”  While that makes for a little less spending money now, it also means that we won’t be scrambling to pay the bills later. 

While your mileage may vary, our takeaway lessons from our year of living on a single (reduced) income are these:

  • The Emergency Fund is Everything: although we were able to manage on one income during “normal months,” the unexpected expenses would have sent us deeply into debt if we hadn’t had any savings. Fortunately, all that saving we had done in the past kept us afloat when things got difficult, and we are now able to add to and rebuild the fund.
  • “Normal” Months are Pretty Rare: One month it was a tax bill that we hadn’t forecasted accurately, another was an large medical co-pay, and then there were car repairs and home repairs to be made. As one of my favorite old radio commercials used to say “Expect the Unexpected.”
  • Equitable Division of Labor Keeps us Healthier and Happier: While Mr. Vega was very willing to take on all of the housework duties, and I was very willing to shoulder all of the responsibility for earning money, dividing things up that way made us miserable! He is an extrovert who thrives on human contact, so that much time at home wasn’t good for him. Conversely, I am more introverted and truly enjoy homemaking, and being gone for so long each day left me too little time to enjoy the home we worked so hard to buy. Our current arrangement allows him more time around people, and gives me more time at home, making us each much happier with how our days are spent.
  • Be Willing to Seek Help: My husband has a diagnosed learning disability that qualifies him for assistance with his post-secondary education through our state’s department of Vocational Rehabilitation. When we made the decision for him to return to school and pursue a different career,  we knew we could afford tuition, but we didn’t anticipate just how much his textbooks and welding equipment would cost. His willingness to explore the support available to him is allowing us to remain debt-free while he completes his degree. And because Texas is in desperate need of welders, they are happy to support his training in the field, making it a truly win-win situation.
  • Work Where you Spend, if you Can: Taking on a grocery store job saves us not only a small percentage on our grocery bill, but also an hour or two each week by eliminating that errand from our schedule. Two birds, one stone!
  • Underearning is as Stressful as Overspending: We are strong proponents of living as far below your means as possible. We avoid car payments by driving used, sub-compact cars, keep our computers and smartphones for as long as there is software available to support them, our house is half a century older and 1/3 the size of the average American home, and we have never taken a trip that wasn’t to visit family. We know that many people don’t have the option to seek higher-paying work, and are already working more hours than they should have to in order to make ends meet, and we are grateful to have the opportunities we do. And there are a few things like craft beer, high-quality shoes and occasional nights out that, while they are absolutely possible to live without, make us happier when we have them. So we’re willing to work a little more in order to keep those luxuries.

There are so many factors that go into deciding how a household operates best, and we are lucky to be able to experiment with different ways of doing things. It’s been a challenging year, but also an invaluable experience in learning more about ourselves and about what constitutes balance in our particular situation.

What lifestyle changes have you tried making? How did they work for you? 

It’s Time: The Grocery Price Book

I first read about grocery price books over at The Simple Dollar, years ago. Not being into spreadsheets… or math… or shopping, it didn’t seem to me to be a terribly sexy project. The other ways in which I managed to trim my expenses were successful enough that I usually had enough room in my food budget to buy whatever I wanted whenever I wanted without much thought. When Mr. Vega and I began to focus more on whole, real, organic foods, our grocery bills went up, and I just felt happy that we could afford to eat the way we wanted to. After all, we were debt-free, saving for a house, and even had money left over for travel and fun.

Since my husband traded his full-time sales job for life as a full-time student, however, we’ve had to tighten our belts a bit. In January, we managed to wrestle our food expenses down to just over half of what we’re accustomed to spending… mostly by eating out much less than we had been. Also, one of my favorite bloggers, Brandy over at The Prudent Homemaker, is diligent with her food expenses: She keeps a detailed price list of food she buys to feed her family of nine, and her monthly shopping lists are terrific guides to seasonal low grocery prices. Simply following along and stocking up on some things when she does has been tremendously helpful!

But each home is different, and no one solution works for everyone. Our household in Austin, Texas, comprised of two adults with full-time outside commitments, two cats, and a nascent garden, is quite different from hers in Las Vegas with seven children, a work-at-home spouse in addition to a full-time work-outside one, and an abundant home garden that is the result of several years’ worth of effort. And both her home and mine will be different from yours, with your brand-new baby, or giant dogs, or busy travel schedule.

And so the time has come for me to buckle down and invest a bit of time and energy into learning exactly what our most-purchased items usually cost, what a good deal really looks like (because fifty cents off sounds great, but what if it’s normally sixty cents cheaper at the store down the street?), and seeing how much more space we can get in this recently-contracted budget of ours.

I’ve sorted through our shopping lists, and created a spreadsheet on Google Drive listing sixty items we purchase regularly (conventional wisdom suggests starting with a list of 15-20 things, but once I started, I kept thinking of more!), and I’m actually looking forward to learning where the best prices are and seeing how much money we can save. Grocery store sales generally run in 8-12 week cycles, so I reckon it will be Spring by the time I have a good handle on this, but check back and I’ll share how it’s going!

How do you keep track of grocery prices in your area? What patterns have you noticed?

 

Our January 2016 Budget

I created my first budget about ten years ago from a template I found in Dave Ramsey‘s book The Total Money Makeover, and after years of practice, it’s become habit for me to make a new budget every month.  I get asked on a regular basis to help people set up their budgets. I’ve been able to sit with a few friends, but time and distance prohibit me from helping individually every person who asks. Every household is different, so every budget needs to be different, too. Also, it’s important for me to say here that I am not a financial planner or adviser, and that everyone needs to be accountable for making informed choices about their own money. That said, since it can sometimes be helpful to get an idea of what other people are spending on and saving for, we have decided to share our budget. I’m showing where our money goes as a percentage of our take-home pay, both to maintain some privacy and also because it’s more practical: Regardless of the dollar amounts, it’s a good idea to try and save some money each month, meet your basic needs, have a little fun if you can afford to, and return something, however small, to the communities and organizations you care about.

Here’s how it breaks down this month for us:

  • Giving 3%. This category is on the small side this month. Not being religious, we don’t tithe, and we only have one gift-giving occasion in January. The balance of this category will go into donation boxes of non-profit institutions we visit this month. We also make an effort to contribute to charitable organizations and relief efforts throughout the year, and volunteer some time to causes we support. 
  • Emergency Fund 10%. Our Emergency Fund is currently big enough for us to survive for about four months with no other income. While that felt comfortable for us when we had one spouse with a full-time job, and one with several part-time and freelance income streams, now that we are down (for the time being) to one partner with one full-time job and a very little bit of part-time work, we are working toward having a year’s worth of expenses set aside for emergencies. By my calculations, at the rate we are able to save, it would take us about six years to reach that number! Because we anticipate returning to our 2+ income status in a couple of years (thereby returning to a smaller Emergency Fund), we’ll probably never hit our temporary goal, but we’re aiming to set aside 10% of everything we bring home in the meantime. 
  • Tax & Insurance Fund 10%. We maintain a separate account where we amortize our annual term life and auto insurance premiums, and set aside money to pay taxes on any 1099 income. 
  • Mortgage 25%. Our only debt is this 30-year fixed-rate loan, and we made a 20% down payment to avoid PMI. If we don’t pay anything extra, the payment (including principle and interest as well as escrow for property tax and insurance) is a quarter of our current take-home pay. We REALLY wanted a 15-year mortgage, but if we had done that, our currently reduced income would be more of a crisis than an inconvenience, so I guess we made the choice that was better for us. Still, we’re planning to get it paid off just as soon as we can.
  • Utilities 3%. This includes electric, water, natural gas, sewer and trash pickup. We are constantly looking for ways to reduce our usage, and hope to continue to see this number go down.
  • Mobile phones 3%. Our mobile phones are recent-release smart phones with high-usage packages. Admittedly an indulgence, we switched providers last year to save about $250/year over what we used to pay, and this expense would be the second cut we made in a financial crisis (the first is coming up below).
  • Home Improvement 2%. The Home Improvement Fund is one of the last budget categories we pay into right now. We are making continuous minor improvements at the Little Hippie House, and hoping to save enough to replace the aging roof, remodel the bathroom & kitchen, tear down a load-bearing wall, and install new floors. That all could take quite a while, but we’ll keep chipping away at it, as our finances allow.
  • Cable/Internet 2%. Cable would be the first thing to go in the event of a financial crisis, and I suppose our internet would have to slow down a lot if things got tight (or maybe not: Google Fiber is slowly making its way into our neighborhood). But it’s another indulgence we’re comfortable with for now.
  • Transportation 1%. Our transportation expenses will be ridiculously low this month, in part to one of us being a stay-at-home spouse, and the other one working just a few miles from home. Having paid-for cars that won’t need servicing, inspections, or registration in January helps a lot, too! (Remember, though, that our car insurance falls into another category… this number would double if we included it here)
  • Food 11%. Food is the big budgetary challenge for us this month, but we’re determined to make it work. When our income is bigger, we normally spend about double what we’ve allotted for January! This month, we’re planning to minimize meals out, work our way through the frozen holiday leftovers, and take advantage of our upcoming small winter garden harvest. In addition to feeding ourselves this month, it’s my hope to use 5-10% of our weekly food budget to build our home food store… I really love going to our little chest freezer for a gallon of milk or to our garage for a jar of peanut butter instead of having to run to the market when things run out!
  • Pet Care 1%. This category this month consists entirely of canned food for our two cats. We have more than enough kitty litter and dry food to get through the month, and their annual veterinary visits aren’t until March. 
  • Clothing 2%. We aren’t planning any clothing purchases this month, but we’re setting a little aside so we can do a Big Shop in the Spring. 
  • Entertainment 3%. Entertainment is the one area where we consistently  underspend! Every month, it’s a challenge to get ourselves out to the movies, a play, or to hear some live music. We’re still working on that, for the sake of balance.
  • Personal Care 9%. Our Personal Care budget should really be called “MY Personal Care budget,” as Mr.Vega gets an inexpensive haircut every other month or so, and is in the process of growing an Epic Beard, so we no longer buy him razors or shaving cream. Because I’m in the process of Changing Looks, hairwise, this month, this category is more than double what it usually is.
  • Education 6%. Even community college costs something, at least for now: there are a lot of political promises being made on the campaign trail to change that. That will be lovely if it happens, but in the meantime about 6% of January’s pay will go for tuition. 
  • Vacation 7%. Last summer, we went to a five-day music & arts festival that we just loved. It’s time to buy tickets for the next one, and because it’s an out-of-town camping trip, we count the tickets as a travel expense, rather than “entertainment” (and this part is a little weird, but because the event is limited-capacity, tickets are sold lottery-style, with each person allowed to request a maximum of two tickets. We each put in for two, and if we get all four, we’ll sell the extra pair at face value and recoup half of our expense. But we’re sending payment for four tickets in January, so that is what we have to budget for).
  • Professional Development 2%. My new job will reimburse me for this training after I complete it this Spring, but registration is first-come-first serve, which is why I’ll be paying for it this month.

So there you have it: our January budget, with every dollar accounted for. There’s plenty of room for improvement, but we’re not unhappy with it. Feel free to share in the comments how different it is from (or similar to) yours… I’m always curious to learn how other people are doing it.

On Insurance

The apartment complex that we lived in for our first year in Austin experienced a fire the other day, and lost a whole building. 24 units. Thankfully, no one was hurt, but about sixty people lost everything they owned, and thirty of them are still displaced, just in time for the holidays. Not everyone lost their homes in the fire: the rest of them had everything they owned destroyed by smoke, sprinklers, and firefighting efforts. We only moved out of there five months ago, so we know that complex requires tenants to carry $100K rental insurance policies, but that wasn’t a hard sell for us: we are big believers in maintaining insurance.

IMG_0109

Our renter’s insurance policy, when we had one, cost us $363 annually, or a little more than $30 per month. We have come to view insurance as an inextricable cost of whatever we’re insuring: If we can’t afford to insure a car, for example, then we believe we can’t afford the car at all. Around here, health insurance comes before restaurant meals and entertainment, life insurance takes priority over gifts or travel for family visits, and homeowners insurance gets paid before we buy things for the house. Because before we get anything new, we want to make sure that an accident or illness wouldn’t cause us to lose what we’ve already worked so hard to achieve.

It’s not easy to watch our hard-earned money vanish into the ether every time we make an insurance payment. We’d much rather get a newer car, or at least get the ones we have detailed, than pay for insurance we hope we’ll never use. The amount of the annual checks we send for our term life insurance policies could pay for a weeklong tropical vacation every single year (The longer you wait to buy it, the more it costs. And you’ll never be any younger than you are today). And we would each be sporting pretty stylish wardrobes if we chose not to spring for our own “affordable”health care coverage each month.

But here’s the thing: If we were to drive without car insurance, say, we would be subjecting ourselves to hefty fines (in the neighborhood of a year’s worth of full coverage) just for failing to produce evidence of insurance at any routine traffic stop. An accident that totalled one of our cars would leave us without the transportation that is an integral part of our ability to earn money and be self-supporting. And in the event that we found ourselves damaging someone else’s vehicle or causing them bodily injury, we could be sued for damages, and lose everything we have. Similar or worse scenarios play out when one considers forgoing health insurance, renters or homeowners insurance, and life insurance. One moment of distraction, once suspicious lump, or in the case of the apartment fire, one cigarette on someone else’s balcony that isn’t fully extinguished, and any one of us, without insurance, is looking at total financial ruin. So, we’re willing to shell out some money to protect ourselves from those potential outcomes, even when it means giving up on some of the other things we want.

Insurance isn’t sexy or fun. But if something bad happens and you’re uninsured, it could be years, even decades before you (or your survivors) are in a position to do anything sexy or fun at all. So before you leave your uninsured home to put your uninsured body into your uninsured car and drive to the mall to spend the $830 that the average American will spend on Christmas this year, consider spending some of that cash on covering your assets. Because however little you think you have, it is guaranteed to cost a lot more than you imagine if you were to lose it all.